Balance transfers vs. debt consolidation

Debt is a means of using your future purchasing power in the present by not having to pay immediately. While financial aid is extremely useful, most people would like to get rid of their debts as quickly as possible. So it’s instrumental to have a basic idea of the various schemes at your disposal so that you can choose the most suitable one to help you dodge your debts.

Two of the most prominent schemes to eliminate your debts are balance transfers and debt consolidation. But choosing even one among the two can be tricky if you lack out-and-out knowledge on the subject. So, here is a clearer picture of balance transfers vs. debt consolidation.

What is Balance Transfer?

The term “Balance Transfer” refers to the process where a portion of funds, either money or credit, is moved from an account in one financial institution to another. A balance transfer can be a valuable tool to manage your debt, if you know how to go about it.

Types of Available Balance Transfers

The various types of balance transfers in the financial world include credit card balance transfers, and loan transfers.

Home Loan Balance Transfers

A home loan balance transfer is where you are given the choice by a new financier to opt for lower interest rates on your home loan payments. If you have your debt balance transferred to a service provider like Bajaj Finserv you can rest assured that your Home Loan will come at the some of the lowest interest rates in the country.

Personal Loan Balance Transfers

With a personal loan balance transfer, you will find the interest you pay in the long run would be comparatively lesser. With Bajaj Finserv for example, if your loan transfer eligibility is met, they would take on the balance of your Personal Loan at much more competitive personal loan interest rates.

Credit Card Balance Transfers

A credit card balance transfer is apt if you have large amounts to pay off on your card. The amount you have to pay will be covered by the institution you transfer it to. The company, in turn, offers you a lower interest rate.

The Upside and the Downside to Balance Transfers

A balance transfer could be what you need to pay off your debts faster. When looking at the bigger picture, these transfers help in saving money. But they can be risky to take on as well. With balance transfers, you open yourself up to more debt by spending more. For instance, credit card balance transfers would reduce the payments you make on your existing bill but it can also lead to you spending more on either the old card or the one with lowered interest.

Balance transfers would be convenient for you if you are looking to clear your debts while keeping a check on how much you spend in the process. With the right research and strategy, this entire scheme is pretty much a no-brainer.

What is Debt Consolidation?

Understanding debt consolidation is important before you zero in on a financial aid for debt repayment. Debt consolidation is a way to combine all your various loans into one single debt. You can also merge all your debts into a personal loan.

This offer is considered useful by many because repayment of a single loan is easier than monthly payment of multiple bills. Additionally, when you combine all different debts into one, your principal value increases which lowers the interest rate.

Which is Better?

Though you now know the difference between balance transfer and debt consolidation, are you still confused about which scheme to go with? The suitability of the scheme depends upon your particular situation and financial scenario. If you own a home loan debt on a high APR card (Annual Percentage Rate) and are looking for a scheme that allows you to pay off the principal and also lowers your interest rate, then balance transfer would be the ideal solution.

Find a balance transfer scheme that offers a low fee and a considerable grace period. You can use this grace period to easily pay down the principle. One such Home Loan Balance Transfer scheme proposed by Bajaj Finserv offers incentives like nil foreclosure charges and 3-EMI holiday.

You can opt for debt consolidation loans if you have multiple credit cards with high balances on them and are facing problems in covering them all.

A debt consolidation program will combine each debt into one monthly payment. Depending on the program, you can also negotiate a lower monthly total.

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Amortization: All you need to know

While it is very commonplace to take out loans, it is advisable to resolve them as quickly as possible. To do that, you need to make regular payments to cancel out your debt. But just paying them regularly is not enough, you need to be smart about it. It’s essential to have a basic idea of the various terms and processes like loan amortization and Amortization Schedule, as this makes your loan repayment an easy affair.

What is Amortization?

Amortization is a financial term for the process of dividing the cost of an intangible asset over a period of time. The capital expense for an intangible asset is spread out over a specific period of time for tax purposes.

It also signifies the repayment of loan principal over a period of time. The debt is paid off in regular instalments with a definite repayment schedule. Consumers usually encounter amortization with a mortgage or car loan.

How it Works

Let’s assume Company ABC has an outstanding loan of Rs 1 crore. If Company ABC repays Rs 50,000 of that principal every year, we would say that Rs 50,000 of the loan has amortized each year.

Similarly, in the context of a home loan, amortization is the process by which loan principal decreases over the life of a loan. Here, with each mortgage payment, a portion of the payment is goes towards reducing the principal, and the other portion of the payment pays off the interest. This is referred to as Loan Amortization. When opting for a home loan, make sure your loan scheme includes quick approvals with easy and fast online banking facilities. One such Home Loan scheme, proposed by Bajaj Finserv, offers incentives like nil prepayment and zero foreclosure charges.

What is an Amortization Schedule?

A Home Loan Amortization Schedule in India is a table, which details each periodic payment on a mortgage, as generated by an amortization calculator. Each payment to the home loan lender will comprise of a portion of principal and a portion of the interest. The calculations for an amortizing loan are performed using time value of money formulas, known as the Loan Amortization formula.

Amortization table is a schedule that imparts important information about the loan to the customer. It can save both time and money if used properly.

The Amortization chart contains all the details about the loan like the amount borrowed, the period of scheduled payments, and tax payments the lender makes. The Amortization schedule will then show each payment to be made, along with the amount being deducted as the principal and interest from the loan. It also reports the new balance after each payment.

As you will observe, the principal amount decreases with each payment. You will now know exactly when your home loan will be paid off. If you are applying for a personal loan then consider factors like ease of approval and repayment, foreclosure charges, and the duration of the grace period before zeroing in on one. Bajaj Finserv offers nil foreclosure charges on Personal Loans to facilitate ease of repayment. It also boasts of 5 minute approvals on their online applications.

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Taking out a Home Loan? Here are 5 repayment options you didn’t know about

Picking your home loan option based on the cheapest possible rate? Think again. There are a number of factors that you should take into consideration before you finalise your choice – flexibility of services and rates offered by the lender, processing charges, prepayment fees, and more. It’s important to know what Home Loan options are available to you. On the surface, a low interest rate is the most important factor. But if you dig a little deeper, you can avoid pitfalls that a lot of first time loan seekers fall prey too.

Home loans are a long term commitment. When you first purchase your property, you may commit to payments that are not sustainable and that will end up overtaxing your resources. It’s also important to know the procedure, and to understand what is required while applying for a home loan.

Here are the main types of Home Loan options:

Fixed Interest Rate:

A ‘fixed’ interest rate is one that remains consistent throughout the entire tenure of your loan. There a few variations of fixed Home Loans available, offered by banks and other financial institutions. Once such option is a semi-fixed type, wherein the interest rate remain static for 2-5 years, after which the current floating rate of interest is applicable.

Though this type of loan is appealing, there are some drawbacks. Fixed loan schemes are generally priced 1-2% higher than floating loans. Additionally, some lenders may demand additional payment is you decide to foreclose on your home loan. Others, like Bajaj Finserv, offer low or free foreclosure options, which allow you to get out of the agreement without incurring additional debt.

Floating Interest Rate:

This is one of the most popular home loan options for first time buyers. In this type of scheme, the rate of interest varies according to the economic climate. The interest rates are dictated by the PLR system and the Base Rate System, used by financial institutions and banks respectively. When there is a dip in the market, there should also be a corresponding decrease in interest rates.
These variable Home Loans are the most sought-after Home Loan options in India as they have viable prepayment options, which allow you to finish repaying the full amount faster without incurring any penalty.

Making Balloon Payments:

This type of loan is favoured by both banks and customers alike as it allows for larger repayment instalments. A balloon payment is a bigger, lump-sum amount, which is more than one-third of the standard instalment. It’s preferred by some because it allows for quicker loan repayment, and increases your loan eligibility. However, this type of home loan also has a higher rate of interest.

Opt For Refinance:

When looking for a good home loan, best options include refinancing your loan. Refinancing, in essence, is the substitution of one loan with another. This is very popular with home loan seekers as it is a good opportunity to get a lowered interest rate and gives them a chance to shorten their loan tenure.

Many banks and financial institutions like Bajaj Finserv, offer their customers a variation of refinancing, which allows them to take loans of up to the current value of their property if they have purchased their homes within a 12 month period, using their own funds.

Accelerated Repayment Scheme

Under this scheme, borrowers will have the chance to repay their loan faster with larger EMI payments. This is useful for people whose payment capacity is higher than the stipulated repayment instalments. The accelerated payment scheme is popular with customers who don’t want to lose the tax benefits that come with lengthy tenures, but would like renegotiate their existing EMI schemes. One of the advantages is that the loan is repaid faster, which results in less overall expenditure. However, your lender can also levy additional charges if you wish to switch or alter your existing payment scheme.

Today, applying for a home loan is a much simpler process. Modern technology has made the experience seamless and customer-friendly. For example, Bajaj Finserv offers customers online home loan approval. You can get your application approved within minutes and disbursal is available within 72 hours. Take advantage of the low interest rates, starting from 9.85%.

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5 ways your Credit Card is Secretly Sabotaging Your Credit Score

It is important to have a good personal credit score in India or anywhere else in the world, as it creates a mark upon your financial standing. Credit score is calculated by looking at your credit history, which includes your credit card payments and loans.

Banks and lenders use your credit score to determine your eligibility for loans, mortgages, credit cards, automobile loans, and to calculate your rate of interest for these loans. Financial firms such as Bajaj Finserv offer home loans with an interest rate of 9.85%, only if you have a good credit score. The problem you might not even realise is that your credit card is hurting your credit scores.

Excessive Loans

Credit cards might seem like answer to your prayers in an emergency situation, but before you could apply for more than one, think again. If you have taken a number of loans, like an automobile loan, a home loan, and a personal loan, and also have a bunch of credit cards, you are can be in serious debt-trouble. This can cause an effect of payment defaults on credit scores. Banks and lenders assess your bank statements before lending you funds. So knowing your poor credit score is a serious problem and lenders will reject you for this.

Not Paying When There is an Issue

When there is an issue with the credit, whether it’s a double swipe or an accidental extra entry, you naturally assume that you wouldn’t have to pay, until the problem is fixed. This is wrong. If the issue is not solved on time, you would still have to pay for it. If you don’t, it will most likely cause more problems for you. After you’ve paid and the problem is fixed, the bank will reimburse the extra money back to you. However, if you don’t pay, your credit score will be affected.

Scraping the Pot to Pay Bills

Paying your credit card bills every month is good. But also make sure you’re not forgetting to pay the minimum fee for credit cards regularly. This will make your creditors assume that you’re struggling financially and that is not a good mark to have. Make sure you pay your complete payment before the due date to raise your credit score.

Disposing Your First Credit Card

It makes complete sense to do away with cards that are of no value to you. If your card gives you no rewards, has high interest rates , and high annual fees, it would seem like the perfect reason to get rid of it. However, if that card happens to be your first, we would suggest that you stick with it. But if you already have a card, it will contain your oldest credit statements and probably show your long list of successful repayments. This will reflect well on and improve your credit score.

Maxing Out Your Card Too often

Just because you have large cash limit on your credit card doesn’t mean you can use it all. In fact, if you use 60% of the credit you have, you will end up with a bad credit score. Even if you did pay your bills on time every month, it would make no difference, because your creditors will think you rely too much on credit. So if you have about INR 50,000, ensure that you stick to using less than 60% of that; a safe 50% is fine as well.

The most important thing is to keep a firm eye on your credit score whenever you can. Credit scores can change from month to month. Try to maintain a score of 750 and above.

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Buying a home made easy – 7 easy tips for a smooth purchase

Investing in a new home can be one of the most fulfilling life decisions anyone makes. If this is your first home investment, then you have probably put a lot of thought into finalising the property you want. The first few questions that come to mind could be ‘How do I actually afford it?’ and ‘How to manage to buy a home?’

Fortunately, securing a home loan in India is quite an easy process. You just need to be aware of the technicalities and be sure of what you’re looking for. Here are a few tips for buying a home and making sure your investment is worth every rupee.

Pick the Right Location

Before you apply for a home loan, make sure you’ve chosen a home in the right location. It shouldn’t displace you so much that it becomes a hindrance to your daily routine and causes more expenditure than you had planned. Make sure the locality is safe and close to basic civic amenities like schools, banks, and hospitals.

Improve Your CIBIL Score

CIBIL score is a calculation of how safe you are as a borrower. It’s fairly simple to maintain a good credit score. Pay your bills on time, don’t max out your credit cards, and clear off any outstanding debts. If you have your finances in order, your credit score will give the lender a good idea of how you’ll handle your home loan.

Shortlist Your Options

This applies to two things: your house and your home loan. Don’t mindlessly go through countless property brochures and home loan offers. Pick your best options and approach only those builders and financial institutions that meet your needs.

Buy What You Can Afford

Just because you’re opting for a home loan, that doesn’t mean you can actually buy the costliest house on your list. You still have to put in money for a down payment and you still need to clear out EMIs every month. Calculate your tentative EMI amount and see if it fits within your monthly budget. If you have access to the internet, Bajaj Finserv provides a free online Home Loan EMI Calculator. You can make use of this calculator to calculate and plan your finances appropriately.

Get Pre-Approved

Pre-approval lets you book a home even before your loan amount is sanctioned. If you have a good enough credit score, the bank can deem you eligible for a set amount of money. This pre-approval is valid for a good enough time period, usually around 6 months. If you get this done before you even start searching for a home, you can peacefully go about the process of booking your home and getting the loan sanctioned without any issues.

Pick the Right Interest Rates

This is a crucial step for any home loan seeker: deciding which home loan rate of interest to choose. Both fixed and floating rates have their own pros and cons. Essentially, a fixed rate of interest will make all your EMIs equal and a floating rate will have different EMIs each month. With fixed rate you might get more security and fewer saving. A floating rate may prove to be relatively less secure when it comes to your finances, but may lead to more savings in the long run.

There Is No Right Time

Don’t depend on the market statistics and wait for the property prices to fall. Conversely, rushing to buy a house just because the rates have come down for a small period isn’t a good idea either. Keep in mind that property prices don’t fluctuate too much. If you’ve found a good enough house, evaluate your financial condition to check if you can afford it. And if you can, then go ahead and buy it before someone else does.

You could also apply online for a home loan through companies like Bajaj Finserv, who not only process your application on the web, but even let you set up an online account to manage your home loan from wherever you are

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3 things to keep in mind before taking a Loan Against Securities

If you’re an avid stock market investor in dire need of money, then taking a loan against shares may prove to be your best course of action. Pledging a house or gold to obtain a loan is not always possible; that’s when a loan against securities (LAS) comes into the picture.

However, like every other form of credit, you need the right documentation to obtain a loan against securities. You may already be wondering about things lenders will ask before taking loan against shares.

Below are some of the prerequisites in the loan approval process.

The Basic Eligibility Criteria

In order to obtain a Loan Against Securities from financial companies like Bajaj Finserv in India, you need to be a citizen of the country. Your age is also a deciding factor in the loan approval process; you need to be at least 25 years old when the loan is sanctioned. Your loan against securities eligibility also depends on your monthly income. It’s essential to have a regular source of income, regardless of whether you’re a salaried individual or a self-employed one.

Bajaj Finserv will offer Loan Against Securities to you, if the minimum value of your securities is at least INR 25 lakh and if you reside in any of the 17 major cities mentioned on their website, including Bangalore, Chennai, Hyderabad, Mumbai, Delhi and Kolkata.

Keep Your Proof in Order

The first document that you need to get your hands on is the application form, which makes for the first step in the loan approval process. At this time of the loan against shares process, you’ll also need to submit your identity and address proof. The signature proof and date-of-birth proof are some of the other documents that you’ll be asked for.

Whip up Your Financial Records

If you’re a salaried professional, then loan providers like Bajaj Finserv will ask for the details of your income, including your latest pay-slip and your Demat statement for the last 6 months. However, if you’re a self-employed individual or representing a company, then the process slightly differs. Instead of your income details, you’ll need to present your balance sheet, income tax returns and P&L account statement for the last 2 years.

When you apply for loan against security at Bajaj Finserv, you also have to provide your bank account statement for the last 3 months. Remember that these may not be the only documents required for loan against security; additional records may be asked for as well during the loan processing, depending upon your qualifications.

At INR 15 crore, Bajaj Finserv offers one of the highest loan amounts in India to both salaried and self-employed individuals. Companies and firms are eligible for a loan amount of up to INR 10 crore. At Bajaj Finserv, you also have the flexibility to swap your pledged securities according to your need.

With the right qualifications, it’s pretty easy to obtain a loan against shares in India. In fact, Bajaj Finserv takes no more than 5 minutes to approve a loan application. What’s more, if your loan is sanctioned, you’ll have the cash in your bank within a mere 72 hours.

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7 popular reasons to take a Personal Loan

7 Popular Reasons to Take a Personal Loan

A personal loan seems to be a popular choice among the masses because of their effortless and transparent approval processes. Whatever maybe your reasons to take a personal loan, banks are here to assist you. With its nominal requirements in terms of documentation and securities, opting for a personal loan sure seems like the easy way out if you are in urgent need of cash. Bajaj Finserv is one bank which doesn’t ask for any collateral or securities when you opt for an unsecured personal loan of 5 Lakhs to 25 Lakhs.

While you may wonder if your reasons are valid enough to demand a personal loan, here are some popular ones.

1. Personal Loan for Home Improvement Projects

Personal Loan for Home Improvement Projects

Adding value to your home by investing in a couple of home improvement projects is a smart move. Remodelling your home can increase its resale value. By opting for a personal loan, you can save money on your home equity and on the high interest charged for your credit cards.

2. Personal Loan for Holiday

Personal Loan for Holiday

Using a personal loan to finance your vacations saves you from the short-term pressure of the credit card payments. With easy EMI options available you can repay the loan within the stipulated tenure while maintaining your current lifestyle.

3. Personal Loan for Medical Emergencies

Personal Loan for Medical Emergencies

Traditional health insurances do not cover all the medical procedures. So if there’s a major medical procedure you’ve been putting off for the lack of funds, now it is the right time for you to take the personal loan for medical emergency . Also for unforeseen emergencies, having an access to a certain amount of cash will only lessen your burden of payment.

4. Personal Loan for Educational Purposes

Personal Loan for Educational Purposes

While going for a student loan seems like the right solution when you are short on funds for your tuition, it is still expensive. With tenures extending up to 12-15 years, you would end up paying more eventually as compared to the short-term tenure of a personal loan. With an option to choose between a fixed and floating personal loan interest rate, and the option of pre-paying your debt is an attractive alternative.

Bajaj Finserv offers a loan up to 25 lakhs to fund your education and doesn’t require any closure fees when you opt for part payment.

5. Personal Loan for Wedding

Personal Loan for Wedding

A wedding is a delightful occasion but also an expensive one. A low-interest rate personal loan is a perfect way to fund your big day. You can easily repay the loan with a tenure of 1-5 years giving you that much required breathing space to settle into marital bliss.

6. Personal Loan for Used Cars

Personal Loan for Used Cars

Banks lend money only if you are looking to buy a new car. Also if you have an existing car loan which you haven’t repaid already, then getting a second loan for a new car is almost impossible. A personal loan can fund the cost of a used car and doesn’t need any securities for the loan approval.

Bajaj Finserv offers 100% sanction of a Personal Loan within 5 minutes of your applying.

7. Personal Loan for Paying Debts

Personal Loan for Paying Debts

You can repay your student, medical, and credit card debts by opting for a loan. The fixed rate of interest for the entire tenure can help you sustain yourself financially when times are tough.

7 Popular Reasons to Take a Personal Loan

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Upgrade Your Startup To An Enterprise In No Time!

India startups have not only gained momentum, going on to become mammoth brands that have put India on the map, but have also changed the way we perceive business growth and success. But any breakthrough business idea needs working capital for it to grow out from a startup to an enterprise.

Often, the most crucial issue faced by talented entrepreneurs is hunting down investors and that’s where business loans step in. They offer much-needed help with a working capital loan and can help drive your fledgling company in the right direction. A small business development loan can help stabilise a startup when it falters, help it expand at a critical stage or reduce the pressure on the business owner, so he or she can concentrate on new business and quality rather than worrying about meeting daily expenses.

If you’re wondering how to your startup can go from small to big, here are the things to keep in mind:

A Clear Vision

A well-defined vision is the first step for a startup to cross the line from new and unstable to mature and established. An entrepreneur or small business owner needs to have clarity about the business, its services or products, its quality, its USP, its values and its market. Although the goals may be changed or redefined every quarter or every year, a consistent vision helps a small business grow in easily mapped stages.

A Dream Team

Even Alexander the Great would not have been able to conquer the world without his trusted soldiers, and similarly, your startup cannot grow without talented staff. Take a cue from the largest brands and businesses in the world today who cant stop talking about hiring well, nurturing human resources and being employee-focused, and understand that your company can only expand into a trusted brand with a team that is as dedicated, passionate and hard working as you are! So look for the right people with values that match your own as well as skills that complement your business vision and goals.

Also Read : What Do You Choose To Grow Your Business? A Small Business Credit Card Or A Business Line Of Credit?

Keeping up on speed

Getting things done quickly and efficiently is the reason why small firms are often able to beat their larger competition, and capitalizing on speed is what your startup needs to do too. It can make a huge difference if your small business is able to launch a new product on time or is able to move faster than your bigger contemporaries. Successful startups never delay the process of getting things done, and the most productive businesses are the ones who make the most of their time. Whether it is hiring more people when the need arises, moving into a bigger space, buying state-of-the-art machinery or redoing branding when the times is right, use speed to your advantage and your smart-up will upgrade into an enterprise in no time!

Hero to Strategist

There comes a time in the lifespan of a startup where the entrepreneur needs to redefine his or her role. This means that the owner goes from doing and deciding everything himself—as the hero—to delegating smart and focusing on getting new business and analysing the ever-changing market—as a strategist. This shift is key to upgrading a startup to an enterprise and relies on the judgement, skill and acumen of the business owner. Make sure you know when the time is right for you to change your role to suit your business requirements.

Reinvest in Your Business

Last but not the least, your startup requires funds to begin operations, hire the right talent, create your product or service, sustain itself and expand. Not infusing your startup with the right funds at the right time can spell disaster for your business. In this regard, even a small secured business loan or a small business development loan can be a lifesaver taking your new company to dizzying heights. If you are wondering how to get a loan to start a business or the requirements for a small business loan, you can take help from Bajaj Finserv.

As you work hard and channel your energy into your startup, don’t forget to research the right lender and the right business loan to keep your startup going strong. With low interest repayable in easy tenures, a hassle-free online application process and approval in as less as a day, the Business Loans Bajaj Finserv may be just the thing your startup needs.

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